Correlation Between Gamco Global and Federated Max-cap

Can any of the company-specific risk be diversified away by investing in both Gamco Global and Federated Max-cap at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gamco Global and Federated Max-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gamco Global Gold and Federated Max Cap Index, you can compare the effects of market volatilities on Gamco Global and Federated Max-cap and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gamco Global with a short position of Federated Max-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Federated Max-cap.

Diversification Opportunities for Gamco Global and Federated Max-cap

0.7

Correlation Coefficient

Gamco Global  Federated Max-cap

Poor diversification

The 3 months correlation between Gamco and Federated is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap and Gamco Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gamco Global Gold are associated (or correlated) with Federated Max-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Gamco Global i.e., Gamco Global and Federated Max-cap go up and down completely randomly.

Pair Corralation between Gamco Global and Federated Max-cap

Assuming the 90 days horizon Gamco Global Gold is expected to generate 0.56 times more return on investment than Federated Max-cap. However, Gamco Global Gold is 1.79 times less risky than Federated Max-cap. It trades about -0.1 of its potential returns per unit of risk. Federated Max Cap Index is currently generating about -0.07 per unit of risk. If you would invest  434.00  in Gamco Global Gold on October 23, 2024 and sell it today you would lose (25.00) from holding Gamco Global Gold or give up 5.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gamco Global Gold  vs.  Federated Max Cap Index

Gamco Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamco Global Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Max Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Max Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Gamco Global and Federated Max-cap

The main advantage of trading using opposite Gamco Global and Federated Max-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Global position performs unexpectedly, Federated Max-cap can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated Max-cap will offset losses from the drop in Federated Max-cap's long position.

The idea behind Gamco Global Gold and Federated Max Cap Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.